Member managed vs manager managed is the first structural choice an operating agreement records, and it changes which numbers the agreement needs. In a member managed LLC operating agreement the owners run the company themselves and every decision is a vote at a threshold the agreement names. In a manager managed one the members hand day-to-day control to one or more managers, and the agreement has to record what the managers cost, which decisions stay with the members, and the ownership it takes to remove a manager. This page sets the two side by side by what each records, works the manager-managed figures on an example, and points at the free worksheets on this site. It publishes no clause text and no rule about which structure a state assumes by default.
What is the difference between member managed and manager managed, in the document
The member-managed agreement's management clause says the members decide, and the voting clause does the rest: ordinary decisions at a majority of ownership, major ones at a higher threshold. The manager-managed agreement adds a clause naming the managers, their authority, their pay and the members' power to remove them, and reserves a short list of decisions to the members regardless. Both are numbers in blanks: thresholds, a cost and a removal vote.
The member-managed thresholds, worked
On three members with $50,000, $30,000 and $20,000 in, an ordinary majority is any combination over $50,000 of capital and a 67% major decision is $67,000 that must vote yes. The operating agreement worksheet turns each threshold into the capital and the members it takes, so a member-managed company knows who can act alone and who cannot before the question comes up.
The manager-managed figures: what the managers cost and what it takes to remove one
A manager managed LLC operating agreement template records the managers' pay and the ownership needed to remove a manager. The manager-managed worksheet on this site prices the managers from the pay you enter and turns the removal threshold into capital and members: at 60% on $100,000 of capital, $60,000 of ownership must agree, which with shares of 50, 30 and 20 means the largest member plus one other. The threshold is the members' own; the worksheet publishes no rule.
Choosing between them, and what this site does not decide
Members who all work in the business tend to stay member-managed; members who are investors, or who want one person accountable, tend to appoint a manager. Which fits your company, and which your state assumes when the agreement is silent, are questions for counsel and the filing office. What this site does is work the numbers each structure needs, free, and keep the managers, the thresholds and every amendment against the company on LLC Lane Pro.
Questions people ask about member managed vs manager managed
Which is better, member managed or manager managed?
It depends on who the members are and who runs the company day to day, and on your state's defaults, which this site does not publish. Work the thresholds and the managers' cost on the worksheets first; the choice is then about people, not numbers.
What does a manager managed LLC operating agreement record that a member managed one does not?
The managers, their authority and pay, the decisions reserved to the members, and the ownership it takes to remove a manager. The manager-managed worksheet works the cost and the removal vote.
Can the members still vote in a manager managed LLC?
The agreement reserves certain decisions to the members, usually at a threshold; which decisions and what threshold are the members' choice, and the worksheet turns the threshold into the capital and members it takes.